controllers in there for spacing and for safety. who wants to make the bet the first time that there's a problem in the air? >> thank you very much for that, phil lebeau. we're going to wrap it up there. as we can see the markets have turned positive, all three indices. microsoft, that story reports on "street talk" giving a boost to the markets as well. finishing on a positive note. thanks for watching. hi, everybody. we enter the final stretch for monday. welcome to the "closing bell." maria bartiromo at the big board. >> what a day. i'm bill griffeth. u. just moments ago the floor of the new york stock exchange joined the city of boston and the whole country in the moment of silence honoring the victims of the boston marathon bombing. plus we have the formal charges in the case. the criminal complaint has been issued and unsealed. we will have full details on all that still ahead on "closing bell." >> a lot to cover. a reversal of fortune for the

markets. investors shrugging off disappointing earnings news. caterpillar, which we got out this morning. and a decline in home sales. jonlsen and johnson shares hitting an all-time high. we'll talk to ceo alex gorsky from j & j exclusively laying out his strategy for the health care giant. meantime, shares of netflix, big gains. about 7%. ti is also higher. both will be reporting earnings after the bell tonight. they are due out about an hour from now. we'll have full team coverage of the numbers and the full analysis coming your way. take a look at the markets as we approach all of that. dow jones industrial on the highs of the day. big victory given the fact we had been negative for much of the day. nasdaq composite also turning from the lows. that, too, at the high of the day with a gain of 30 points. now technology the leadership on the upside. s&p 500 up 8.25 points. one-half of 1%. what is driving this market

today, bob pisani, in the middle of all the action right now? >> folks, we were down 80 points as you saw from the dow industrials interday. we've come up 100, 105 points. still not a lot of direction to the market. that's part of the problem. the sectors, i'm happy to see materials and energy moving after a terrible week. all of the cyclical names a terrible week last week. technology doing better. health care, consumer staples all up. a modestly upward push to the market. still doesn't seem to be a lot of direction. look at house ing. very disappointed in the existing hope sales number for march we got out this morning. building materials are doing really well. boise cascade, big wood products. knocked the cover off the ball. said wood product demand is strong as the housing market continues to get better. one number good, another number not so good in the earnings season and in the economic reports. move on and show you some of the multiindustry companies. a lot of big nachls reporting tomorrow. illinois tool works, ingersoll

rand. ge reported on friday. still down. textron, still down. a $29 stock a few days ago. a little concerns overall about the earnings outlook. finally, maria, something unusual. canadian national railways just reported their earnings. they were supposed to report after the bell. suddenly i don't know why it came out. just a little proud here. $1.30 is what they have. i'll check to see if that's in line with consensus. that was supposed to happen after the bell. maria. >> thank you so much. a closer look at what's moving this market today. >> let's talk about that in our closing bell exchange with stephen wood from russell investments, greg mcbride from bankrate.com, joe duran from united capital and mr. market himself, our own rick santelli, stephen wood, you know the earnings that have come out so far, we got a slew of them this week, have not exactly set records. but you say stay the course in the mashlrkets nonetheless. >> if you've got long-term time

horizon, the volatility we're seeing was expected by us. the pullbacks, you can reload some beta. picking better names in what we think is going to be an okay earnings environment, but a challenging revenue environment. not every balance sheet is going to execute equally in this environment. you've got some opportunities for -- >> what it means is the fed is going to stay the course on quantitative easing, basically. >> i think that is very clear. >> greg, tell us about this new study you're out with today. >> we found three in four americans say they are not more inclined to invest in the stock market now given the fact that interest rates are at record lows and the stock market's recently hit highs. that's the same as we found a year ago. now, a year ago, you know, in the past year interest rates have come down further. the market's gone up more. yet people are not swaying. >> what's their big fear? that they've missed it already? they're afraid it's too high? they're going to pick moment? is there too many risk? what's the big fear? >> some of each. quite frankly the memories of

2008 are very fresh. a lot of people, 2008 wasn't the first time they'd been burned. they got burned in the tech bust. burned in '08. they swore off equities. at this point they have yet to capitulate and get back in. >> who do you think is in this market, joe duran. retailer investor obviously not. is this all institutional? >> i think we've had net influence. we've been telling our clients to prepare for more volatility and so we have setbacks. and just when people start to feel good because volatility has been low and the markets have been going up, it starts to feel good, then we get a scare. that rattles people. i think we're in a cycle now, it's the fourth year in a row where you get this increase in volatility after tax time. and you see all the companies revising their earning forecast to temporary expectations. and so typically in the next month or two we'll have some external macro surprise that will get everyone concerned again. it's been a very consistent pattern that we do well in the fall and the early spring and

then cool off and get more volatile. >> rick santelli, markets all waiting for these earnings reports this week. in the meantime among your markets, gold has bounced big today. the dollar is still flirting with 100 yen. what are you watching? what are the benchmarks you're keeping an eye on this week? >> well, you know what, i think the biggest benchmark that i'm going to pay attention to is the dax stock index in germany. it's down about 1.75% on the year. last week not only were eurozone car sales, registrations off, but germany was off in particular. i think keep it simple. i think as those auto numbers deteriorate, it's just going to exaggerate all the other weaker economies. and when you get the imf admitting that austerity isn't the way, and i don't disagree. if you didn't do reforms and you didn't do pro growth, all three ingredients needed to make a growth economic cake, i shudder

to think what happens next. many suspect moody's may downgrade spain. >> with all of that said, stephen, how do you want to allocate capital right here? >> i think you need to look into equities. it's very interesting. look at the 1,000 and 2,000, large and small cap space, but also defensive versus dynamic, the rally we've seen has been very strong. it's had this very defensive tam boar tambor. it's like this sub tub city -- city constitution effect. global economics, look at the u.s. first. name by name basis. emerging markets. i would think global bonds. longer term investors, commodities from a valuations perspective look attractive. >> commodities? gold? >> not necessarily gold.

>> oil? >> dr. copper. the valuations are beginning to pull in a little bit if you've got three to five years which maybe a lot f of people don't have. if you're a longer investor like your clients. just rebalance into that. take a multiasset approach. >> greg, i don't know if you asked those investors who are risk averse that you had in your survey, but where are they putting their money if they're not in the stock market? they're getting nothing from fixed income right now. >> yet they're content with that, it seems. it's cash. it's bonds. this is what concerns me, bill. this is going to require the individual investor to redefine risk. safety is not hunkering down in bonds and cash. particularly for longer time horizons. people don't save enough to reach those long-term goals to accumulate that nest egg earning conservative returns. they need the returns that equities provide. they're going to have to learn to embrace risk. there are people that will drive 90 miles an hour down the interstate while texting and changing lanes without signaling but they're afraid to put their 401(k) in the stock market because they think that's risky. >> what about insurance

companies? i'd like to ask our guest, you know, insurance companies have allocations that have not been allocated in large part to equities. still in fixed income. we can't call insurance companies kind of quote, unquote, dumb investors, right? >> well, look, insurance companies, they have sort of -- they have that need for liquidity in the short term. and i would argue that in particular when you match that up against, say, a retirement account for your individual investor, we're talking about different time horizons. individual investors don't have the same time requirement. they can afford to take more risk. they're reluctant to do so. >> joe duran, where would you put your money to work right now? >> we think you have to look outside the u.s. occasionally. right now the emerging markets look frankly like the area that's been the weakest for a long time. they're sheltered from a lot of the fiscal issues that the developed world has. so if you see a global devaluation that's occurring in all the world's fixed

currencies, and i think that rattles a lot of local investors as well. they see a lot of instability. japan's stock market has done great. their yen has done dreadfully. what we think is emerging markets is a very interesting area. and for individuals to make sure they understand if they don't invest and grow their eggs, assets, they're going to have to work longer and generate more income which is, of course, a bigger concern longer term. >> yes, indeed. gentlemen, thank you all for joining us today. appreciate your thoughts on this market. heading toward the close. 50 minutes. a day not unlike what you saw friday when the dow was down 93 and finished up 10. down 90 points early on. now a gain of 22. >> big reversal. big reversal on apple certainly. the much anticipated earnings report expected tomorrow. after the break we're going to find out exactly what to expect from apple. plus, we'll debate why the stock is having such a tough time lately dropping below 400 just last week. then the faa warning about long airport delays because of government budget cuts. but in addition to grounding

your travel plans, the cuts could also prevent your portfolio from taking flight which we will look at coming up. don't miss my exclusive interview coming up with johnson & johnson ceo alex gorsky. that stock hitting an all-time high today. how he plans to push it even higher. that and a lot more coming up on the "closing bell," most important hour of the trading day right now. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need

to enjoy all of these years. ♪

is apple apple is looking a little more polished today. the beaten down stock one of the few bright spots on wall street. ahead of its earnings tomorrow. jon fortt previews those in your opinions and what investors will be watching for. jon? >> it's something when near 400 is polished. but let's start by look agent the expectations. $42.5 billion in revenue. $10.07 eps. not terrible considering revenue would be $3 billion more than a year ago. it signals an important dropoff in growth rates for apple. that's where we start digging in. last quarter apple sold nearly 48 million iphones up 28% from the year before. the average selling price of an iphone actually held steady. look at this iphone sales chart. you can see a contrast of where we were a year ago when apple was growing iphone units at 88%

year over year. that's what has analysts taking a sober look at the june quarter which apple will also forecast tomorrow. several on wall street have been lowering their estimates to the mid $30 billion range which would be in line with apple's seasonal patterns. we'll see if the ipad where volume should come in between 15 and 18 million units will pick up the slack. >> all right, jon, thank you very much. so has apple fallen behind because it's a victim of its own success? as it churned out hit after hit for so long. or was wall street just too zealous in its expectations. >> we'll get in to that with andy hargrave and bill krer. with all this bearish sentiment around apple is the company to blame or is it wall street's expectations that got so high on apple? >> i guess the real risk of self-incrimination i'm going to go ahead and say wall street expectations. i mean, the company has done a

fantastic job over the last decade with their product portfolio. and they've really come to dominate a couple markets. tablets, obviously, and smartphones as well. i think the biggest problem is that they've taken all the profits that are available there. and there just isn't room to grow once the market is saturated. >> bill, what do you nithink is going on? from the outside it would appear one of the knocks on apple right now is t innovation is more incremental than transformational. steve jobs is gone. should expectations be coming down anyway for this company? >> i think you're right, bill, the company has been a victim of its own success. they beat wall street expectations for over 30 quarters. i think lulled us all into believing that would extend forever. think about the stock at $700 in the fall. people were starting to bake in apple tv estimates, a china mobile deal, increased capital deployment. and you fast forward to today, the stock is at $400.

there's never going to be another new product. apple has clearly lost all innovation. no china mobile deal. write the cash to zero because there's no -- there's no way they'll ever deploy that. and i think the truth is somewhere in the middle. and the pendulum has just swung too far to the pessimistic side. >> so, andy, what should we expect out of this earnings report tomorrow? this is obviously a very, very critical report given the move in this stock. you've got a handful of analysts taking estimates down. worries about inventory drawdowns. what's most important from the earnings release and would you put money to work in this stock before this earnings report comes out? >> yeah. i think we'd be tactical buyers. you know, we downgraded the stock a few months ago. we're still of the view that true profit growth of the company is going to be difficult to come by, but i'm in agreement. the pendulum has swung too far. i think you're paying such a cheap price for it that you would have to have a whole lot go wrong to not make money from these levels. in terms of the earnings

themselves -- >> why is earnings growth going to be hard to come by? >> because i think you have it already. there's only so much money in the smartphone market and the tablet market unless you can come up with a whole new product that is massively successful. it's going to be difficult to grow the profit pool bigger. >> bill, inevitably there'll be questions about tim cook's leadership and so forth. there have been calls that maybe he's not the guy. maybe they should look around. what do you think? >> well, so far i think he's operated well. i think the sticking point here is after he initially deployed some capital with that nice dividend initiation, there's been little or no follow-through. you know, when apple was growing like a weed, the cash problem was cute, but now it's becoming, you know, very vital to the company's long-term story. we think that as a stock, it would be a lot more compelling if you would increase that dividend by a meaningful amount. and we think that tim cook has the ability to do so.

>> do you think it's warranted that we've seen this huge move down in the stock? i mean, from 700, actually, close to 900, i guess, with some expectations all the way up at 900, is what happened appropriate to this stock? >> you know, i would say from quarter to quarter there's going to be a lot of product introductions not only from apple but from peers. it's going to lead to some uncertainty in terms of their near term earnings power. i think what is undeniable is this shift towards tablets and smartphones. and the fact that apple is a primary beneficiary of that shift. over the next three to five years, we'll really start to see the benefits of that positioning. >> andy, what is a -- a price you think is fair for apple right now? i mean, you think 400 is cheap. what is a fair price, then? >> our 12-month fair value estimate is 425 to 520. it's 4 1/2 to 6 times ebitda.

i think that's a fair range. >> what will get us there? does there need to be as i was saying before a transformational product out, or can they get there just on the product line that they have right now with incremental increases? >> i think they can get there just on the product line that they have right now, quite frankly. i mean, it's the uncertainty is expensive on wall street. and right now we have a lot of uncertainty. as long as you can get through june without a total calamity, which we think you can, then i think you'll see some stabilization. >> in terms of the new innovation, i mean, where would that come from? let's talk about what is new or might be new on the horizon. what's a game changer? knowing what we already know about the ipad, the mini ipad, and what have you, is there a product or application or anything on the horizon that you could think up right here to think this would actually be a game changer for apple? >> do i really need an apple watch, for example? >> yeah. >> bill? >> i would say that the apple tv has been talked about for years and years. >> yeah. >> you know, i think that where

there's smoke, there's fire. >> that's a good one. >> the problem is, you know, even if the technology is ready, the media companies may not be ready to cede some of that control. that could be a product that an average selling price of north of $2,000. if you could move units, well, certainly that would be a volume driver. but i agree with andy that, you know, overall, the company has the right products. they can make incremental improvements. the issue is in emerging economies, a lot of these consumers are picking up products that are just good enough. we think that over time as they become more affluent, they will be looking to switch to those apple products. >> all right, guys. thank you so much. your thoughts on apple. out with earnings tomorrow. we'll have a little better idea what they're up to at that point. thanks for joining us. 40 minutes left. and we just heard from art cashin, the bias to the buy side. not a lot of conviction even in that at this point. >> he said it was small order. still 60/40 to the buy side. an activist investor taking a $2

billion stake in microsoft, coming up. find out if you should be following that lead and buy into microsoft, next. also, as we mentioned, netflix and ti set to report earnings after the bell tonight. we will have full team coverage of those highly anticipated reports at the top of the hour. you're watching cnbc, first in business worldwide. t be with fidelity, but we can still help you see your big picture. with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. and never back down. who believe the american dream doesn't just happen, it's something you have to work for. ♪

we're for those kinds of people. because we're that kind of airline. and we never stop looking for a better way. it's how we've grown into america's largest domestic airline. we are southwest. welcome aboard. it's easy to follow the progress you're making toward all your financial goals. a quick glance, and you can see if you're on track. when the conversation turns to knowing where you stand, turn to us. wells fargo advisors.

welcome back. the boston bomber suspect has been formally charged today with using a weapon of mass destruction. let's go right to scott cohn.

he's in boston with the latest developments. >> reporter: a little over half an hour ago, 2:50 p.m. local time, the nation paused to remember and boston remembered. a moment of silence that actually stretched for about five minutes with observances at various locations around this city, including just outside of copley square where the bomb exploded one week ago. meantime, in a boston hospital bed, dzhokhar tsarnaev faced his initial court appearance before a federal magistrate from his hospital bed, where the judge ruled that he was alert enough to understand those two charges which potentially carry the death penalty. it was exactly one week ago at the conclusion of the boston marathon last week that the twin bombs went off. the bombs that were allegedly placed there by dzhokhar tsarnaev and his older brother. and the complaint describes vividly the surveillance video

that shows tsarnaev placing his knapsack on the ground just before the first explosion. a few seconds after -- i'm sorry. virtually every head turns to the east toward the finish line and stares in that direction of the first explosion in apparent bewilderment and alarm. bomber two, tsarnaev, virtually alone among the individuals in front of the restaurant appears calm. a few seconds later the second bomb blast goes off and the rest is history. tsarnaev will face a probable cause hearing sometime next month. public defenders have agreed to represent him, the administration rejecting calls to try him as an enemy combatant. the u.s. justice system will take hold here. maria? >> scott, thank you so much. we'll get back as more developments happen there in boston. scott cohn. back on wall street, final stretch of trading for the day. 30 minutes before the closing bell sounds. we've had a complete reversal. at the low the dow down 90

points, now showing a gain of 30 points as we approach the final stretch. tough day to fly today. sequestration being blamed for the long delays at many airports. when we come back, which airline stocks could actually take off or be grounded as a result of the budget cuts. shares of johnson & johnson hitting an all-time high today. has the company finally passed its recall nightmare? ceo alex gorsky will weigh in today. exclusive, 4:00 p.m. eastern. ♪

♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh

welcome welcome back. if you're traveling you are bracing for delays after thousands of faa wores wekers w hit with furloughs. hampton pearson is at reagan national outside washington, d.c., with the latest developments. hampton, over to you. >> reporter: maria, we've had about a dozen flights here subject to delays of one kind or another. those outbound 45 minutes to an hour. there was one three-hour delay. in your backyard, the new york area airports, newark, laguardia and jfk have had significant delays according to, quote, staffing issues, we are told. it's the beginning of some 15,000 controllers being furloughed over the next six months. all part of those sequester cuts. the airlines are very concerned going forward. they're, in fact, suing the faa

along with the pilots association to try and block the cuts. all dually noted today during the white house briefing with questions for white house press secretary jay carney. >> this is the result of sequester that was never meant to be law. it was never meant to be law for reasons like this. congress can act. it could have acted in the past. it could have brought down the sequester and avoided it entirely. congress could act now to do that. republicans in congress could decide that the victory party is over and it's time to get serious about the economy. >> reporter: now, it was never meant to be, but it is a fact of life for travelers just as the summer traveling season begins to heat up. bill? >> hampton, thank you very much. so what impact will an air traffic control slowdown have on the airline business and on their stocks? joining us, seth caplan, managing partner at airline weekly. an online airline industry

newsletter. and our own phil lebeau joining us as well. seth, obviously the sequester was meant to be a worst case scenario. nobody wanted to see it happen, but it has. is this the worst case scenario for the airline business right now in your view? >> not the worst case scenario, but it's certainly very frustrating. for the all the things we can't control in this world, certainly in the airline industry, it's not a blizzard, it's something that could have been avoided but here we are. for some perspective, you know, the most impact, it tends to be on the shortest flights. flights where people could, for example, choose to hop in a car instead. or maybe take the train in the northeast. that's about one out of ten travelers who take those kinds of trips. the other nine out of ten are on those longer flights where, you know, you can't exactly decide to drive to europe or asia instead. >> that's an interesting analysis. phil, what do you think? how significant will this be on the airlines? and who do you think gets most impacted?

>> well, clearly the airlines that have the most exposure to the northeast. when you look at somebody like a jetblue because of their exposure to the new york area airports. that's the congested area in terms of the national grid. or united with o'hare. they're going to be impacted probably more than others. i think the bottom line is that we're not going to see a huge outcry until there's a big storm system that goes through and then we see massive delays. then you have people complaining vociferously at airports. that's when you're going to have people saying, what's going on here? in the meantime, delays like we've seen yesterday or today, that's not enough to get people really, really upset. >> phil, i would add, by the way, another distinction to make in addition to what you correctly said is that we should look at the airlines that handle the most short haul travel. southwest, among the major airlines, is really an airline that makes its money taking people between places like dallas and houston. trips that you could do by car. and so that's one that might be a bit more disproposition gnrti

impacted than others. >> seth, in your view, how long -- i mean, we don't know how long this is going to go on. how long the sequester is going to be here and all that. is there a grace period for the airline business that they can absorb the slowdowns and things like that? and then after that they have really a problem on their hands? or what do you think? >> well, sure. certainly if -- in the best case scenario, three or four days from now this is over. again, it will be like a blizzard. like one of those things that's a mess but goes away and is quickly forgotten. if this kocontinues on, again, those short haul flights -- by the way, this is not the first time we've had something like that happen. in the sense that after 9/11 the trips that were most significantly impacted for the long term, and even today to some degree, are those short flights. where people can choose to drive. so if this continues, those are going to be the kinds of trips where people are going to say, you know what? i'm not going to deal with that. but probably talking about 3% or 4% of airline revenue overall.

a little more for an airline like southwest. a little less for airlines like delta and united. >> phil -- >> make no mistake. starting tomorrow on the conference calls for the earnings, every airline is going to bring it up. every airline is going to make a point of saying woe is us because we're being impacted by this. >> what about the opportunity of a change, a reversal here? phil, could the public outcry get the faa to change its mind about actually putting this into effect? >> i think it's less likely they'll get the faa to change their mind. it's more likely if there's huge public outcry that then you have people in congress who will say, okay, what can we do special in terms of funding so that the faa can reverse this? but i don't think the faa has any plans to change it on its own. >> all right, guys. we have breaking news. we want to -- thank you so much for joining us. get to our breaking news desk. authorities in canada are announcing a thwarted terrorist attack via amtrak between new york and montreal. let's listen to this. >> before we start, i would ask

that you please turn off or put on silent mode your cell phones. today's press conference will last approximately 30 minutes. the rcp will be making statements on a national security criminal investigation. integrated national security enforcement teams in montreal and toronto. the statements will be followed by a short question period. >> okay. we want to get you the details of this press conference happening right now in canada. let's get to bertha coombs to give us more detail on this terrorist attack on an amtrak train between montreal and new york. bertha? >> we are hearing from the press release from the royal canadian mounted police they have arrested two individuals for terrorism related charges. they actually said that it was against a via passenger train.

it does appear that this was a cross-border situation. as a result of extensive collaborative efforts, they say, they were able to disrupt the threat early. they believe that these individuals had the capacity and intent to carry out these criminal attacks, but there was no imminent threat to the public. similarly, this does not appear to be at all related to the boston terror plot. back to you. >> i was reading earlier as we were getting word about this, they've been following these guys for over a year now. i mean, they were tracking them pretty closely. so i would imagine, bertha, i mean, we don't want to get into the area of speculation. but if -- it looked like they were going to get started on this, whatever they had planned, it was probably going to be sooner rather than later, the reason they're picking them up now. >> you would think. perhaps maybe they just had enough evidence. we'll see when they finally get started. this is actually -- it looks like the spokesperson, or three more senior looking individuals

sat down to the table next to him. certainly these days it is one of those things that national intelligence here and across the globe, they constantly monitor these cells and constantly monitor to see whether there is an imminent threat and try to disrupt them ahead of time. >> once again, as i saw, all the reporters that were there in boston and watertown last week, the coordination among the various law enforcement agencies has been stellar through all of this. now we're seeing this between the canadian police and u.s. homeland security and fbi on this particular -- apparently a thwarted terror attack on a u.s.-bound train. we'll get you more details as this news conference continues to unfold right now. in the meantime, as we head toward the close, about 20 minutes left in the trading session, still up 30 points on the dow right now. >> up next, microsoft getting investor jolt today. it's the best performing dow stock on the session. take a look.

up 4% on microsoft. netflix shares have been spiking ahead of earnings reports. expected due in about 30 minutes. how will they fair as the streaming video competitors keep lining up to take them on? that's still ahead on "closing bell." ♪

[ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ge has wired their medical hardware with innovative software to be in many places at the same time. using data to connect patients to software, to nurses to the right people and machines. ♪

helping hospitals treat people even better, while dramatically reducing waiting time. now a waiting room is just a room. [ telephone ringing ] [ static warbles ] [ beeping ] red or blue? ♪ the ocean gets warmer. red or blue? the peruvian anchovy harvest suffers. it raises the price of fishmeal, cattle feed and beef. bny mellon turns insights like these into powerful investment strategies. for a university endowment. it funds a marine biologist... who studies the peruvian anchovy. invested in the world. bny mellon.

david david faber broke the news. he joins us now with the details. >> microsoft finds itself with a new very large investor today as we reported earlier. valueact, a large activist focused hedge fund, has taken a more than $2 billion position in the software maker. valueact typically takes a position for a long period of time. jeff ubben who runs that firm is focused on the fundamentals and hoping the company can be persuaded, perhaps, to focus less in some ways on its office

franchise and windows and more on other businesses that he believes will add a great deal of value. valueact, as i said, takes its time with its investments. often many years. if they don't go the way it wants, then there is the possibility of activism. sometimes resulting in a board seat or two board seats and a number of different things that take place. nonetheless, one of the larger investments have been made in microsoft by an actively managed portfolio. so many of the large investors are actually index funds in microsoft. and the share is reacting very, very positively today to that position. while a still small position in terms of the percentage of overall shares outstanding, a very large one for valueact. back to you guys. >> all right, david, thank you very much. so is microsoft a buy on this kind of news? let's start talking numbers on mr. softy, on the technical side, carter worth. chief market technician at oppenheimer. fundamental side, steve cortez, founder of veracruz and a cnbc

contributor. steve, this is a fundamental story. would you sink $2 billion into microsoft right now? >> if i had $2 billion i certainly would put it in there right now. i think for the first time in a heck of a long time microsoft is actually a really intriguing story here. i think that this long, lumbering whale is about to start swimming like a shark. when you look at its products, there's a lot to get excited about. whether it's windows 8 and the prospects there in mobile and in tablet. the skype acquisition i think was brilliant. there's much more growth there. i think the easiest place to see just how finally cutting edge microsoft has become is in gaming. and the things that are ahead for thexbox. particularly xbox live. >> carter, let's look at the chart. this was dead money for a long time. what about now? >> that's right. so the chart's appealing in the sense that there's a lot of wisdom in price action. the stock has been moving up since december. and what's also important is that it's breaking above the

down trend it's been in for the better part of a year. finally, relative strength. of all the things that have ever been tested in all quantitative studies, number one, relevant strength. this is a tech stock. as tech stocks continue to struggle, ibm, apple emc, actually microsoft showing fwood heavy volume up thrust in gaps pb we like it a lot. we think you've got a tiger by the tail here, steve. >> wait a minute. >> or whale as you said. >> you guys agree with each other? is that allowed in this segment? >> carter has finally come around. carter, i think it's interesting, too, you mention those tech competitors. i think in microsoft you get to have your cake and eat it, too. you get a substantial dividend yield which you don't get in other tech companies. >> right sf. >> over the last three months microsoft in terps of price performance is about seven times what tech as a whole has done. on top of that you get a 3% dividend yield. you get the financials in the benefit of a cash flow machine. finally at long last you also get an innovative tech company.

>> what about the idea david faber advanced that maybe this -- the term he used was morabund company. if they don't like the moves that ballmer and company are making they will become activist investors. is that maybe the reason they're making this rather than they believe what you do, steve, that there are better times ahead for this company? >> no. bill, it's a good point, but i guess as a shareholder that might be a heads you win and tails you win. if i'm wrong about the exciting innovation going on in microsoft, you probably are going to have an activist investor base for the first time again that will rectify that situation more quickly. but i would note, please, also, that microsoft is not just doing well the last couple of days. it's done very well as carter mentioned both outright and compared to other tech for months. >> yeah. i don't think -- it's too small a stake, less than 1%. also key is how microsoft acts as a defensive name in the event of a market selloff. a lot of defensive names are

crowded. >> thanks, guys. good stuff. see you both later. the final stretch of trading here. we've got about 15 minutes before the closing bell sounds for the day. the market is up 25 points. >> our next guest or at least one of them says investors should think twice before fol r lowing the old sell in may or go away. sam stovall. later, johnson & johnson ceo alex gorsky will tell us which drugs in the pipeline could be for the bottom line. tdd#: 1-800-345-2550 when i'm trading, i'm totally focused. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and the streetsmart edge trading platform from charles schwab... tdd#: 1-800-345-2550 gives me tools that help me find opportunities more easily. tdd#: 1-800-345-2550 i can even access it from the cloud and trade on any computer. tdd#: 1-800-345-2550 and with schwab mobile, tdd#: 1-800-345-2550 i can focus on trading anyplace, anytime. tdd#: 1-800-345-2550 until i choose to focus on something else. tdd#: 1-800-345-2550 all this with no trade minimums. tdd#: 1-800-345-2550 and only $8.95 a trade. tdd#: 1-800-345-2550 open an account with a $50,000 deposit, tdd#: 1-800-345-2550 and get 6 months commission-free trades. tdd#: 1-800-345-2550 call 1-866-294-5412.

tenjust inside the just inside the ten minute mark ahead of the closing bell today. we are just shy, a few days away from may. which now we're thinking about that old saw, sell in may and go away comes into play. will it do it this time we wonder? >> let's check in with sam stovall. he doesn't think it's wise to sell out of stocks altogether this time around. darrell jones also joining the conversation. sam, no sell in may this time around. why not? >> no sell in may. actually, i don't really think you should be selling in may any time. you really should be gravitating more toward the defensive sectors. by doing so since 1990 that would have added 400 basis

points to your portfolio each year and reduced the volatility. of course, knowing past performance is no guarantee of future results. this year because we had a very strong intro to the year, market was up in january and february, of the 26 times sinxxvi times s war ii that that has happened it has improved the may through october performance to about 4% versus the more normal 1% and the frequency of advance also went up sharply. >> we'll see if it follows a 27th time. darrell, what do you thipg? history suggests, and last year was a good example of that. beginning in may, we hit a -- late april we hit a peak. then it was off to the races to the downside. you think that'll happen this year? >> no. actually, we don't think that's going to happen this year either. we tend to agree with sam. i think the reality is there will be some seasonalalty in the economic data. that's just how the numbers work. we've seen some of that. we'll probably see a little more. but i think investors are kind of accustomed to that now. they're going to look through the softness in seasonal economic data through the rest

of the year. what they see is an environment in the u.s., anyway, where growth is stabilizing and inflation is low. that's a good environment for equities. >> it's interesting that you say it's a good environment for equities. it has been a good environment for equities. and i guess the earnings so far, sam, actually were higher than the lowest estimates. talk about, what, s&p 500 earnings growth of 2%? >> 2%. that's right. s&p capital iq is expecting growth early on at only about one-half of 1% but realizing that the numbers typically come in about 3 1/2 to 4% better than what is expected. the expectation was something closer to 4%. so we're sort of creeping our way up there now with fewer than 200 companies having reported. >> does that give you a reason to buy stocks here? because the earnings feel a little better or 2% still just 2%, sam? >> i guess the question is, you know, do you want to -- if you're not in stocks right now, do you want to jump in right now? i don't know. my feeling is listening to

richard gere from "officer and a gentleman" i got nowhere else to go. in terms of relative performance, relative yield, et cetera, i think better growth opportunities are found in equities than elsewhere. >> daryl, we spent the first few months of the year not talking so much about the fundamentals. it was more about the fed. but the fed has been in this market for a few years now. >> right. >> and we had a pretty good correction last year, even with the fed in this market. >> it's -- >> is it possible we could have one anyway? >> yeah. i mean, once again, we don't think there's going to be a correction. but i think it's a very good point, bill, in terms of what the fed is doing. the fed is kind of getting out of the way a little bit. bernanke is not going to be at jackson hole this year. they've become a little more hawkish on the margin. what that actually does we think is reduces volatility. we're seeing that in the equity market. lower volatility in the equity market is good for equity returns. i think that's pretty important. on maria's point, you know, expectations are pretty low for earnings. while we're beating or growing a little bit, that's still beating

expect taxatio expectations. that supports equities as well. >> where would you go here? you guys raised your target on the s&p recently, right? >> we did a little while ago. our feeling is we still think we could get middle to high single digits in the coming 12-month period. so better than obviously what you would get in bonds. our feeling is we're sort of barbell approach where we're balanced overweight on health care and consumer discretionary. of the defensives we still like health care better. it's trading at about a 20% to 25% discount to its absolute pe since 1994. similar on a relative basis. >> how upsetting do these terrorism stories become to the markets? how important? we just heard from canada that, you know, there was -- there's a terrorist attack, an attempt. >> they have thwarted it, yes. >> on the amtrak train between new york and montreal. do you think this has enough heft, these stories, that seem

to be happening with frequency now just recently, or enough to keep investors off and on the sidelines? >> don't think it would keep them on the sidelines. i think certainly it would keep us in a sense off balance. when bill told me that off air, my first thought is, gosh, here we fgo. >> yet the market hasn't responded. >> it's not something i want to hear. it's something i wish was out of our life. but i don't believe it's something that's going to affect global gdp unless we get situations that are not thwarted by the police and are therefore more challenging to comprehend. >> thank you, gentlemen. appreciate your thoughts on today's market action, sam and daryl. we'll come back with the closing countdown for this monday. >> earnings from netflix and texas instruments due out in just a few minutes. netflix at an all-time high. rising today ahead of the numbers. keep it right here for the instant analysis of the numbers. you're watching the "closing bell" on cnbc, first in business worldwide. he's agreed to give it up. that's today? [ male announcer ] we'll be with him all day as he goes back to taking tylenol.

i was okay, but after lunch my knee started to hurt again. and now i've got to take more pills. ♪ yup. another pill stop. can i get my aleve back yet? ♪ for my pain, i want my aleve. ♪ [ male announcer ] look for the easy-open red arthritis cap. ♪ everybody has different ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal.

transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. and his new boss told him two things -- cook what you love, and save your money. joe doesn't know it yet, but he'll work his way up from busser to waiter to chef before opening a restaurant

specializing in fish and game from the great northwest. he'll start investing early, he'll find some good people to help guide him, and he'll set money aside from his first day of work to his last, which isn't rocket science. it's just common sense. from td ameritrade. >> inside the inside the two-minute mark. the dow is up ten points. that's going out flat. here's what we're watching for after the close. netflix one of the hottest stocks in the last year will be reporting earnings in the next few minutes. looking for 19 cents on the bottom line. $1.02 billion on the top line. then we get texas instruments. by the way, look at netflix up another 7% today. that was a $60 stock last year. now $174. texas instruments are looking for 30 cents on $2.85scratching

we all are on netflix is peter costa. >> i just don't get it. i don't. >> somebody gets it. >> a lot of people get it. if the stock is trading millions of millions of shares, up 120%, there's a lot of people getting it. >> at least they're turning a profit. >> yes. >> it's not like the dot com days when it was all phantom numbers. >> their business model absolut >> what about this market? take things in stride here. >> it's very, very light volume. you know, i hate to use that volume excuse. you know, up 15 points on the close. it's monday. we've been up almost every monday this year. maybe this is a continuation of that. there's nothing right now that i've seen. i mean, later on in the week we do have the fed coming in. >> we have a lot of earnings coming out this week. that could be our catalyst. >> absolutely. after the close today you're going to see some important names. apple tomorrow. there's going to be a lot of big names this week. >> all right. thanks, peter. always good to see